Chapter III: Political Economy as a Science

Science, Normative and Positive

Some wag somewhere has remarked that economists suffer from “physics envy.” One could certainly make that charge against W. S. Jevons (1835-1882), one of the founders of marginal economics, when he wrote that a “perfect system of statistics … is the only … obstacle in the way of making economics an exact science”; once the statistics have been gathered, the generalization of laws from them “will render economics a science as exact as many of the physical sciences.”[1] More than a century has passed since Jevons wrote these words, and in that time there has been a growth of vast bureaucracies, both public and private, devoted to establishing this “perfect system” of statistics. Yet today economics seems no closer to being an exact science than it was in Jevons’s day. Despite this failure, economic orthodoxy clings to the notion of itself as a positive science. As Milton Friedman puts it,

Positive economics is in principle independent of any particular ethical position or normative judgments. As [J. N.] Keynes says, it deals with “what is,” not with “what ought to be.” Its task is to provide a system of generalizations that can be used to make correct predictions about the consequences of any change in circumstances. Its performance is to be judged by the precision, scope, and conformity with experience of the predictions it yields. In short, positive economics is, or can be, an “objective” science, in precisely the same sense as any of the physical sciences.[2]

Underlying Friedman’s view are two distinctions: a distinction between facts and values (the “is” and the “ought to be” of things), and a corresponding distinction between a “normative” science and a “positive” one, with the former reflecting the world of values and the latter the world of facts. So which kind of science is economics, normative or positive?

Let me suggest that the question is meaningless. Every science, insofar as it really is a science, is both positive and normative. Every science, insofar as it is a science, must be “normalized” to some criteria of truth. These truths will arise from two sources: an internal and an external source. The internal criteria involve a science’s proper subject matter and methodology. But these criteria are insufficient to found any science as a science. In addition, there must be external criteria of truth, and these truths can only come from one or more higher sciences. In the absence of such an external check, the science will merely be circular, dependent on nothing but itself and disconnected from the hierarchy of truth. Thus, for example, biology is responsible to chemistry, chemistry to physics, physics to metaphysics. No biologist can violate the laws of chemistry, and no chemist can reach a conclusion contrary to physics. Thus every science is responsible to its own methodology (and therefore “positive”) and to the higher sciences (and therefore “normative”). Every science has, therefore, both its own proper autonomy, based on its subject matter and methodology and its own proper connection to the near sciences, based on the hierarchy of truth. In speaking of the autonomy of a science, we should note that it is only a relative autonomy, not an absolute one. A scientist’s obligation to be faithful to his proper method does not relieve him of the obligation to higher truths. No science can provide its own criteria of truth without being merely circular. When a science attempts to do so, one of two things happens. The first possibility is that the science breaks up into mutually warring camps whose disputes can never be resolved because there are no accepted criteria of truth by which to resolve them. The second possibility is that the science becomes merely dogmatic, and no rational examination of its premises is permitted. In economics, both things have happened: the science is divided into warring factions with no arbiter of truth among them; the principles of the various factions have become dogmatic statements with little connection to reality.

The Physical and Humane Sciences

The hierarchy of science allows us to define what science is, because science is not a mere random collection of “facts,” nor just a free-floating knowledge. Rather, it is knowledge integrated into a hierarchy of truth. To know a thing, anything, it is not sufficient to know the thing in itself, but also how it “fits” with everything else, what its relationships are with the rest of the world. Science then is not just knowledge, but organized knowledge. It is precisely this organization that makes it science. We have many other kinds of knowledge, such as tacit or intuitive knowledge, but these are not scientific until they can be integrated into the hierarchy of knowledge, and thereby submit themselves to the tests of truth that come from the higher sciences. Until we know the thing in the fullness of its relationships, we don’t really know it at all. Therefore science is not just about describing things in themselves, but about describing things in their full relationships with everything else. Now, everything that is, is related to everything else that is, in one way or another. Nevertheless, we can identify two general hierarchies of knowledge, two great branches of science, the physical and the humane sciences. So the first thing to determine about any science is not whether it is normative or positive, but whether it is a physical or a humane science.

The distinction between these two branches of science concerns how the objects of the science are moved to their ends. Physical objects are moved to their ends by “laws” outside of themselves, such as the law of gravity. They do not exhibit any degrees of freedom; that is to say, the planets are kept in their orbits by the law of gravity and no planet can suddenly decide to reverse its course and visit a new region of the heavens. In other words, the motions of physical objects are completely deterministic; they are bound by the laws of nature and cannot deviate from them. We can examine nature and discover its laws, laws that exist independently of will and intention. This examination of nature we may call “naturalism,” and these sciences all terminate in physics, the master-science for the study of physical objects.

Man, of course, is another physical object in the universe of objects, and is bound by the law of gravity no less than any of the planets. However, he is also something more, because while a planet cannot determine its own course, we must determine ours. That is, we are not moved to our ends by a law like gravity, but by the choices we make. Man is that being that can choose his own ends and make judgments about the best means to achieve those ends. This freedom towards ends and means is the essence of what it means to be human. The humane sciences, therefore, have a completely different aim than the physical sciences. The latter aim at discovering the physical laws that must be followed and are always in fact followed; the former aim at discovering laws that ought to be followed if we are to achieve the ends we set for ourselves, and of detailing the consequences of not following those laws. Humane sciences have the human person for their object, and specifically the human person in relationship, whether that is the relationship a person has with himself, his family, his community, the natural environment, or God. Now, political economy deals with economic relationships, those relationships necessary for the material provisioning of society. It is therefore a humane science and not a physical science. Like all humane sciences, it is about right relationships.

Facts without Values?

At this point, the positivist is likely to object that no one can tell us what kinds of relationships are “right” or “wrong.” We can only note the facts and predict the consequences. Therefore science, economic or otherwise, should simply stick to the “facts” and let the “moral” chips fall where they may. This view is based on a distinction between facts and values. As D. Stephen Long has noted, “The fact-value distinction has become so determinative in the modern world that we seldom even recognize the many ways our politics, economics, even our theology assume and perpetuate this distinction.”[3] The fact-value distinction actually has its roots in medieval theology. The medieval theologians insisted that the material world reflects the eternal order of God and operates on God-given laws which could be known without any direct reference to theology. This allowed a certain autonomy for the physical sciences. However, this distinction was not a real distinction, but a methodological one, and a method that is confined to physical motions; the motions of the human will could not so easily be measured and numbered. With the Enlightenment sages, however, the distinction became a real one, became an ontological distinction, one that extended even to human motions. All motions, even human ones, would be reduced to number and quantity and divorced from theology and ethics. As David Hume put it,

When we run over libraries, persuaded of these principles, what havoc must we make? If we take in our hand any volume; of divinity or school metaphysics, for instance; let us ask, Does it contain any abstract reasoning concerning quantity or number? No. Does it contain any experimental reasoning concerning matter of fact and existence? No. Commit it then to the flames: for it can contain nothing but sophistry and illusion.[4]

This test, known as “Hume’s fork,” is by now so enshrined in our thinking that it has become traditional, with even Christian economists joining in his book-burning without a second thought.

Perhaps the best example of the Christian expression of this distinction comes from Alejandro Chafuen, who posits a distinction in natural law itself between the “analytical” and the “normative.” For Chafuen, “ethical considerations… have no impact on underlying truths”[5] and “no ethical judgment can invalidate an economic law,”[6] a law arrived at without regard to ethics. However, a question arises as to whether Chafuen (and the moderns in general) have a proper understanding of natural law, or has he merely confused it with naturalism? Can there be a “value-free” law for humans? The answer to this question depends on one’s theology. The older view of natural law situated it within a discernment of the meanings of things, that is, within their proper acts and ends. Thus, natural law would always involve a teleology, a perception of final meaning, but such perceptions involve philosophical, theological, and cultural questions. The Enlightenment view of nature sought to divorce natural law from any moral or theological authority. Is this actually possible?

Let us take a simple deduction from “nature”: “Lions eat lambs; therefore the strong prey on the weak.” The conclusion would seem to be an unavoidable deduction from the indubitably factual premise, a pure instance of a “natural law,” blissfully free of any moral or theological foundation. But in fact it contains a hidden assumption: the premise concerns animals, but the conclusion is applied to men. Is this valid? Yes, if man is no more than an animal; no, if man transcends the animals. If the latter is true, then natural law can never be just a “reading” of nature, but must be guided by a consideration of the end and nature of man. Can the issue be resolved one way or another by an appeal to pure reason? No, because both views rest on a purely theological foundation. Man may or may not be just an advanced animal and nothing more. Certainly, he is an advanced animal, but the status of the “something more” cannot be proved—or disproved. Certainly, both men and lions enjoy a leg of lamb for lunch; quite possibly, speech is no more than an advanced form of roaring or baying. There is simply no “proof” that men transcend, or do not transcend, the animals; it is a matter of faith and faith alone. Therefore, the question of whether the proposition is a valid deduction from nature depends not on the raw facts (which cannot be disputed) but on the theology by which one reads those facts. And this will be true for every statement which purports to be a “value-free” conclusion from the natural world. The only question is whether the values are explicit or hidden; if the latter, men will delude themselves into thinking that their thinking is “value-free,” when in fact it is a mere attempt to impose their values on others. The solution is never to proclaim a “value-free” conclusion, but to make the values that underlie the conclusion explicit, thereby exposing them to critique and evaluation.

Even if the fact-value distinction could be maintained, it is not always clear which are the “facts” and which are the “values.” For example, if we take the distinction seriously, we must allow the following case:[7] Mrs. Harris is an attorney at the top of her profession who bills her time at $500 an hour. Mr. Harris, on the other hand, is a bit of a lout. He calls her at work demanding a bit of “afternoon delight.” Wishing to be a dutiful wife, she considers her options. Since she is not only an attorney, but also understands economics, she believes that her decision ought to turn on the opportunity costs of the alternatives. She can go home for an hour and lose $500, or she can call an escort service to provide a suitable surrogate for $150. Thus she must measure the gain of $350 against the loss of $500 and decide how the “opportunity cost” compares to the relative values of sexual pleasure and infidelity. Now, an economist might say that the “facts” of the case involve the opportunity costs, while the concepts of adultery and fidelity are mere values. But this is not at all clear. The relative prices of lawyers and prostitutes are mere social valuations that change from culture to culture and, indeed, from moment to moment; they seem to lack the ontological grounding that one would expect from a “fact.” On the other hand, adultery is a fact which “has much more concrete or empirical reality than the putative economic facts mentioned. We can point to the historical embodiment of something called ‘adultery’ much more readily than something called ‘opportunity cost.’”[8]

It would seem, therefore, that the world of human beings cannot be neatly divided into a realm of “facts” and a realm of “values.” While there may be, at certain times and in certain cases, a methodological advantage in making such a distinction, it is merely a way of speaking of things for limited purposes and involves no real ontological distinction. Therefore, Chafuen’s case for a division in the natural law would seem to have failed. A realm of pure “facticity” in human affairs is doubtful. All human observation requires some theoretical framework to make sense of the mere sense impressions. The theoretical framework always involves some value judgments.[9] For example, in measuring unemployment, the economist must first start by

making the decision that it needs theoretical explanation and second [he] must define what unemployment is, both of which are blatantly value-laden (and political) activities. Furthermore, the choice of what methods to use to investigate this phenomenon also involves value judgments, as does selection of the critical criteria about what will be accepted as the “final term” in the analysis, the bases of what arguments will or will not be accepted. However, values and value judgments enter into theory construction on the ground floor by giving the theorist the “vision” of the reality s(he) is attempting to explain. This “vision” is pre-analytical in the sense that it exists before theoretical activity takes place.[10]

We are, of course, bombarded each day by a reams of economic “facts” and statistics. Each and every one of them is surrounded by the same constellation of political and value-laden decisions as is the statistic called “unemployment.” This does not make them invalid or useless, but we must understand the value-laden decisions that went into making each of these numbers. The numbers are not like the numbers we get from looking at a telescope or a oscilloscope or some instrument used in the physical sciences. Rather, each number reflects a judgment about what the purpose and meaning of “economics” is.

Humane Science and Teleology

The major division of the sciences, then, is not the normative-positive duality, but a division based on the object of the sciences, whether they be merely physical or fully human. For the physical sciences, we need only examine the physical world to note the relationships and regularities, and we have, in most cases, ample room for discovering laws and testing them empirically. But when we deal with the humane sciences, the task becomes more complex, for a simple examination of persons cannot be undertaken without first determining what a “right” state of affairs ought to be. For example, if we practice medicine, we must have some idea of what good health is; we must have some “normative” state the departure from which constitutes disease. This seems a straightforward process in physical medicine (although it is actually fraught with many difficulties and conundrums), but can become somewhat complex when we look at, say, psychology. For example, if we take two psychologists, one of whom believes that mental health means giving expression to every sexual impulse, and another who believes that sexuality should mainly be expressed in marriage and family, it is obvious that they will give very different kinds of advice. I have no intention of trying to sort out those issues here; I merely point out that the advice given will depend on each psychologist’s perception of what it means to be a human being, on what the end and purpose of our humanity is.

This is the case with every humane science. Its first task is to understand the end and purpose of the human person, in all of his or her relationships, and that particular science’s role in contributing to those ends and purposes. This search for ends and purposes is called teleology, from the Greek telos, a word which connotes “that which completes or perfects a thing.” Each humane science begins, as it were, backwards, with the ends of man, whether those be the ends of his physical or mental health, his social order, his political peace, his need to pursue truth and knowledge, etc. Underneath all of these ends there lies the necessity of a certain material sufficiency. Without having some security of food, clothing, and shelter, it is difficult to pursue any of the other ends of man. Now, all of these other ends may be higher than these bare necessities, but every other end presumes the necessities, for no man can long pursue anything else if he cannot get enough to eat. Hence, the pursuit of these ends is basic to the pursuit of every other end, and the more easily they can be obtained, the more time and energy can be devoted to the pursuit of other goals. Now, the political economy is the science which deals with the pursuit of man’s material needs, and so it is foundational to every other humane science; even the priest, the philosopher, and the artist need to eat. Therefore, in order to understand the science of political economy, we must ask in greater detail just what the purpose of this science is, which is the topic of our next chapter.

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[1] Quoted in James E. Alvey, "A Short History of Economics as a Moral Science," Journal of Markets and Morality 2, no. 1 (Spring, 1999): 62.

[2] Milton Friedman, Essays in Positive Economics (Chicago: University of Chicago Press, 1953), 4.

[3] D. Stephen Long, Divine Economy: Theology and the Market, ed. Catherine Pickstock John Milbank, Graham Ward, Radical Orthodoxy (London and New York: Routledge, 2000), 3.

[4] David Hume, An Enquiry Concerning Human Understanding (1748 [cited April 3 2006]); available from http://www.infidels.org/library/historical/david_hume/human_understanding.html.

[5] Alejandro A. Chafuen, Faith and Liberty: The Economic Thought of the Late Scholastics (New York: Lexington Books, 2003), 24.

[6] Ibid., 25.

[7] Adopted from Long, Divine Economy, 4-5.

[8] Ibid., 5.

[9] Charles M.A. Clark, "Catholic Social Thought and the Economic Problem," Oikonomia, no. 1 (2005), http://www.pust.edu/oikonomia/pages/febb2000/Clark.htm.

[10] Charles M.A. Clark, "Economic Insights from the Catholic Social Thought Tradition: Towards a More Just Economy," (2005).